Room for tax cuts

The new fiscal framework set out yesterday by the Chancellor should allow scope for some tax cuts in the next budget. It is important these are not crowded out by further increases in spending. Tax cuts are the quickest way to boost real incomes and stimulate the economy. People should be able to spend more of their own income.

As the world economic slowdown continues, led by a world manufacturing recession, it is important the UK has an economic stimulus. The US is growing faster thanks to past big tax cuts, spending increases and recent interest rate cuts. Yesterday the Bank of England once again continued their squeeze, refusing to join the ECB, Fed, and the Central banks of China, Australia, Brazil and all the others that are cutting rates to provide an economic boost.

This entry was posted in Uncategorized. Bookmark the permalink. Both comments and trackbacks are currently closed.

106 Comments

The Chancellor is competing with the Labour Party on promises to spend. Are you not listening to him? There is nothing remotely Conservative about his plans, and meanwhile the PM is intent on pushing through a Brexit deal that hands control of part of our country to a foreign power, the EU/ Ireland. No, I will not be voting Conservative

REply I want a bit more spending on schools and NHS and have lobbied for it. The Corbyn proposals are off the chart and damaging. Can’t you see the difference?

CORBYN complains of children in classes of more than 30. I had 44 in my primary school class and that worked perfectly fine, then but then we largely behaved reasonably well. Will modern technology we could have 200 or 200,000 watching a lecture or doing computer learning if they wanted to learn that is.

The other problem is schools are more about indoctrination in lefty, PC drivel & green crap rather than for real science and education,

If Javid just announced specific taxes with specific dates it would boost confidence now!

Start by promising to keep the IHT £1m threshold each promise and to do so the first day after the election. This the promise the appalling Hammond and Osborne blatantly ratted on for 8 plus years is it? Still just £325K and the absurdly high 40% !

Is this the real reason why he thinks Johnson’s WA is a bad deal but now tolerable? It is difficult to grasp why he is of this view when it was repeated no deal is better than a bad deal. He still thinks and writes it is a bad deal.

The reason for which many people are desperate for tax cuts is because they have to spend every last brass farthing on keeping a roof over their heads. If not for that then people could afford the necessary tax for better services and still have more disposable income.

So sensible rent controls as Labour propose would unlock great policy potential.

This all stems from the lax credit epidemic spawned by the much-vaunted Big Bang of the 1980s and the ensuing residential property bubble, but what is done is done.

Many people – perhaps inaccurately – refer to the whole raft of financial deregulation at that time as big bang, of which the specific you correctly cite was a part. But that’s how usage changes language.

It coincided with the demutualisation of hitherto sober institutions, and a cultural change across the whole realm of finance, typified by the heavy pushing of debt.

The Tories need to admit some things are better run by the State. The payitng public has no choice over which train company it uses there is no scope for competition.
Similarly when Mrs T took the ITV franchise away from the excellent Thames TV and awarded it to Carlton the public suffered from awful programmes.

Of course, Sir John, it’s right to spend our own money on such important things.
But what is worrying many of us is that a richer UK may eventually be handing over even more money to a greedy EU, if this ”deal” comes to pass. (Because, if the EU is left with a foot in the door, then we can expect them to take full advantage of it. Why would they want/allow us to get clean away, with a thriving economy and all?)
We want to spend money our our own people, and then we can help others on our OWN terms, not via the gaping maw that is the EU.

There is a difference of degree certainly. If you are going to just throw money at a problem, there is an argument to be made that you’re better off throwing more so that you have enough to make a difference. The real problem is that money is not spent sensibly, and on this point there is no difference between Conservative and Labour (or indeed any of the other parties).

Some voters will no doubt be sold on the pitch, We will waste less of your money than the others. Others will not. Still others will despair that there is no party that will use our money wisely. Whatever way you cut it, the Conservative pitch is deeply uninspiring. Labour’s magic money tree is bigger than the Conservative’s.

Reply to reply. Yes your proposals have always been realistic. However your headline writers are trying to match Corbyn. Yes not at his ludicrous levels but very large sums bandied about that I and many others find worrying bearing in mind the inability of the State to spend large sums without waste/cost overruns etc.

When you start to add the words, waste elimination, accountability with penalties etc, I for one, will be with you. Until then I will believe that politicians can neither do nor believe there is any alternative to spending our money without strings attached.

Just look at what the CEO has said about Crossrail. More hundreds of millions of our money and delays. You are a rail export, explain why I do not hear politicians clamour for heads to roll as they do at the drop of a hat for CEOs who drop a clangour in large PLCs?

On your last point, Tilly, if Boris Johnson came up with some change that satisfied the DUP then I would probably be prepared to go along with that and accept the rest of his deal, warts and all, and therefore cease to support the Brexit Party. However I don’t see how that could happen, given that there are now no on-going negotiations with the EU and so the most he could do would be to make a promise about future negotiations which hardly anybody, and least of all the DUP, would trust.

“It seems unlikely that the EU would be willing to embark on further renegotiation of the Irish protocol during the next, now inevitable, Article 50 extension period; but then the formal decision on the present extension period explicitly ruled out any negotiations on the Withdrawal Agreement or the Political Declaration, yet they took place.”

“There has been a lot of misunderstanding about the deal and perhaps one of the things that I wish we could have spent a bit more time explaining it because there won’t be any checks on stuff coming from Northern Ireland to Great Britain, we won’t be implementing, we are the Government of the UK, we won’t be implementing any checks, of course not.”

Keep saying it! You are so right!
I write this as an OAP who is living off very little money. My family lives in UAE and also Singapore where the direct taxes are very light. That is why they live there. Rich people are rich because they like money and they go to places where they can both find it and keep it. And they bring jobs and work with them.
Most, not all, know, too that a happy workforce stays with them and supports their company. A few fools so not know this and they go bankrupt. I learned this over ten years on the dole.

We should indeed attract the rich and hard working to come to (or to remain) in the UK.

Corby would make many more leave or bankrupt and the rest would be deterred from working much, employing many or investing much. But Hammond and Osborne have been deterred the rich and hard working with absurd taxes. The attacks on the Non Doms has (entirely predictably) been a economic disaster for the country and has raised less tax too. The attack on landlords and tenants likewise is idiotic.

Indeed HUGE tax cuts are needed, but government spending cuts too. We have the highest taxes for 40 years and idiotic and over complex taxes too. Yet the state delivers so little of any real value. State sector worker (with pensions included) are also paid about 50% more than in the far more productive private sector.

Perhaps the best investment the state could make would be to make all the state sector workers who do little of any value or just inconvenience the productive redundant! There are load of these people. Release them to get a proper & productive job.

The state should aim for about 25% of what would be a far larger GDP anyway and not aiming for 50% of a much lower GDP as Labour and indeed to a lesser extent the Conservatives both are.

Plus they should abandon the idiotic, expensive and unreliable energy lunacy that just exports jobs (and the C02 emissions perhaps even increasing them)!

“I am favor of cutting taxes under any circumstances and for any excuse, for any reason, whenever it’s possible.” Milton Friedman.

Given Hammond and Osborne have given us the highest taxes for 40+ years it is hugely possible and very beneficial. So promise it now in detail and do it as soon as possible post election. So much state sector fat and parasitic tumours to be cut out and released for productive work. A bonfire or red tape too would be even more beneficial.

We are rid of Hammond and Osborne but we still suffer Carney and misguided people at the BoE why? The red tape and restrictive rules around bank lending have deterred me from making several, perfectly sensible, job creating investments and developments. The very high, irrational & over complex taxation has too. As has the mere threat of the dire Corbyn.Mc Donnall lunacy!

Another reason the US economy is doing better than ours is low energy costs, largely due to fracking. It is depressing our government have yet again given in to the Green Mafia and stopped fracking, supposedly due to tremors similar to those caused by a passing lorry.

Election evidence from the US and Australia is that giving in to the green lobby loses votes. My own biggest misgivings about Boris Johnson are that he has been duped by the climate hysteria and is promoting the ruinous ‘zero carbon’ policy. If there was a credible alternative party for whom to vote I would support it for this reason.

Johnson is using taxpayer’s money to appease the public sector and their unions who see this GE as another opportunity to abuse their monopoly position and hold him to ransom or else strike action just before a GE

A refusal to sanction tax cuts for low income employees is an act pure political cowardice and a capitulation to the public sector unions and the left

The Tories are now ‘owned’ by the left. They dance to the left’s tune and have become a hostage to leftist dogma

May capitulated to the liberal left on race and gender for fear of accusations of bigotry and now Johnson’s capitulated to the left and Labour’s client state on higher state spending and zero tax cuts simply because the victorious agenda of the left that the Tories are ‘mean and selfish’ should they offer tax cuts to road-sweepers, plasterers and taxi-drivers is now all dominant

It’s been a never-ending Tory capitulation to the left since the overthrow of Thatcher

Understand that the taxpayer is being sacrificed on the altar of power politics

Dominic, the Cons have ceased being Conservative in their pursuit of floating voters, the “centre” ground, and their desire to please the latest lobby groups – be it the ecozealots or those pushing gender identity politics.

TBF The Tories did not have far to go. Many, including Johnson, see themselves as One Nation Tories (Wets). They believe in the State and using is institutions in a paternalistic and indeed patronising way. ie “We will help you because we think you cannot.” They also believe in compromise. The one thing the Left do not do is compromise.

Project Fear seems to be taking a back seat with both main parties promising large increases in spending. Labour’s talk of £50bn a year seems fanciful – never mind the wisdom of increasing spending by so much, how can such a vast sum be spent wisely ? Shades of our ridiculous foreign aid budget.

The headline yesterday saying our economy would be 1% smaller a year thanks to Brexit doesn’t look good until you read it in conjunction with other reports saying that predictions of our future GDP have been increased while that of the Eurozone, and particularly Germany, have been reduced to figures significantly below that of the UK.

Why is more of the same medicine going to work ?. We have had 10 years of ultra cheap money and multiple rounds of QE. What have we got to show for it aside from a massive debt hangover ?.

Asset prices have been inflated, the super rich have got richer as the rest of us have to work harder just to stand still. Then the elites are puzzled as to why Trump gets elected or Brexit happens…

Growth (stripping out that attributed to the spending of borrowed money) has been very weak. Debt has soared to levels that would quickly cripple the British economy if rates were ever normalised. Clever manipulation of the figures to define debt as a percentage of GDP should fool nobody. The British economy is in very serious trouble.

Is Sajid Javid the most comical politico since chemical Ali ?. It is profoundly depressing that so few in the media expose his speeches as the rose tinted nonsense they are.

In your piece you mentioned that the US is growing faster thanks to past big tax cuts, spending increases and recent interest rate cuts.

Aside from tax cuts, why is that a sensible strategy ?. The Americans have so much cheap money they are drilling for shale oil that costs more to get out of the ground than the oil is worth and methane gas being flared off because it’s not worth capturing. Just so they have bragging rights for being the worlds number 1 oil producer!.

Following a model that leads to debt laden companies buying back their own stock with cheap money and massive misallocation of capital is just crazy.

1.China to bring in it’s own gold backed currency to replace the dollar sending shockwaves around the world economy ?

2.The 11 year bull run of the stock market ends with a sharp downturn as the world’s debt mountain weighs heavily on the system ?

3. A major bank fails creating a crisis far bigger than 2008. This time currencies themselves are affected with investors losing faith in fiat money. There are no levers to pull this time with interest rates at rock bottom and so much QE money in the system?

4. The pound falls to below parity with the dollar. ?

5. Gold soars in value as confidence is lost in the value of money ?

6. Social disorder as banks are forced to close and only those with cash have access to goods ?

Thank you for your kind reply. I would be intetested in your views on negative interest rates. How can capitalism function when the value of money is less than zero.?. If excessive debt caused the 2008 banking crisis, why are politicians not learning the lessons?. I take your point about ‘needless misery’ but wont ‘kicking the can down the road’ simply inflate the bubble bigger making the inevitable collision with reality even more harmful?

“The UK’s credit rating could be downgraded, according to ratings agency Moody’s, which says Brexit has caused “paralysis in policy-making”.

It has changed the outlook on the UK’s current rating – which is a marker of how likely it is to pay back its debts – from “stable” to “negative”.

Moody’s also criticised the general election promises to raise spending with “no clear plan” to finance it.

The UK is currently rated Aa2 – the third highest grade”
==

Any idea then why? And why Germany has retained its AAA rating?

Reply I think it odd that you do not point out Euro area government bonds no longer have the power of a domestic Central Bank behind them that can simply create money to repay them, which means they are not the same type of credit as a UK gilt or a US Treasury any more.

I agree John, our tax system has become too far spread and far too complicated, indeed the tax take is now so wide you can hardly spend anything at all without the Chancellor grabbing some of the purchase price.

Simplify and reduce, simplify and reduce, simplify and reduce, and at the same time increase personal tax allowances to £15,000 and inheritance tax to £1,000,000 each individual immediately.

Sir John – -you write ‘People should be able to spend more of their own income.’

What do you think a Boris government will do during the first or second year of office to deliver that intention? Cost of living at the lower income end of society gets higher constantly -what might reverse it?

“… a referendum would be held before the UK could agree to an amendment of the Treaty on European Union (‘TEU’) or of the Treaty on the Functioning of the European Union (‘TFEU’); or before the UK could agree to certain decisions already provided for by TEU and TFEU … IF THESE WOULD TRANSFER POWER OR COMPETENCE FROM THE UK TO THE EU … ”

Reply Yes, I don’t think so, but of course the WA Treaty does transfer powers on a temporary basis to the EU compared to just leaving

I would like to see ,as a boost to personal and UK wealth, the removal in their entirety of Stamp Duty and Inheritance Tax as both are iniquitous examples of taxing already taxed income. For the nation I want to see Corporation Tax down to 10% max as a boost to investment. To do anything more we need to decide on the level of government we need, or put another way stop spending or spend more effectively.

How will these tax cuts be paid for ? More borrowing ? Less spending ? Efficiency savings ? We do not have anything left to sell off, so I think we are entitled to know.

I may be in the minority of one here but, I support the Bank of England’s stance. It is there to support Sterling and it has consistently fallen against the Dollar (US), the Yuan and the Euro over the last 10 years. This stance will also help in the long run to prevent inflation which has been kept in check due to cheap imports and low wages from MASS IMMIGRATION.

Mark, tax cuts can be paid for by government not doing the things that that tax is collected for. We the UK tend to have an open weave blanket approach to doing things socially through which many deserving cases fall. I would tend to target those for instance that sleep on our streets, our veterans in trouble way before I dished out money to anyone with more than two children. Many of us while supporting less government will have different ideas on how to achieve it. It is a subject for national debate.

I’ve just been reading Lawyers for Britain analysis of the Boris WA. It is horrendous how much we will be under EU control in some cases in perpetuity

EU citizens become a protected species which the indigenous population isn’t, having their rights guaranteed and subject to ECJ ruling.
Most of government policies would be subject ECJ oversight and fined for non compliance.
The£39 billion is not mentioned only a vague formula which will be interpreted entirely by the EU.
It’s worse than I thought

Under the WA the UK will not have control of its money or borders for at least another three years during an extendable transition period likely to last until December 2022, and there is no guarantee of regaining sovereignty after that.

It is a classic bait-and-switch. The mainstream media and Lib/Lab/Con machine are working together to persuade Brexiteers to buy Boris’s Brexit-In-Name-Only treaty.

Agreed. I am sick to death of democracy being manipulated by LibLabCon. This has been happening since Heaths days where we get a choice of 3 pro-EU parties. They are all alike under the skin and Boris is no different with his Brino Treaty! It just kicks the can down the road in the hope that people will just be so bored and disillusioned that they lose heart and stop voting altogether because our votes get ignored anyway! I have heard many people say they will never vote again, and although I don’t agree with them I can understand how they feel.

All 3 main parties are tricksters. Time to break the LibLabCon cartel and replace them with honest democratic politicians with real life and real business experience.

Including Employers NI, which is an employment cost that if not paid to government could be paid to me, I had 40% of my earning stripped from my wages before they were paid to me. I am a PAYE serf. I then paid VAT on “luxury purchases” including home repairs (on a rented property) and car maintenance, duties on my alcoholic relief and petrol, high train fares to get to work, council tax plus social care supplement, VAT on heating my home and cooking, insurance tax on my car insurance, home insurance and health insurance, flight tax and your government has removed my entitlement to child benefit through the tax system as I am rich. I am probably paying my landlord’s tax on the property as well.

I do not have sufficient “richness” to pay stamp duty, capital gains tax or inheritance tax but your government would like to take it from me in spades.

So yes there is room for tax cuts. My neighbours, who have houses similar to mine and are in receipt of benefits take nicer holidays than I do. They do not leave the house as early as I do.

Under Universal Credit I could leave the house 1.5 hours later for a local minimum wage shelf stacking job, receive my child benefit, come home 1.5 hours earlier, pay no travel costs, leave the job at work and be no worse off than I am at present.

Narrow Shoulders- with you all the way- it does not pay to work. My/our generations greatest shame is to not work, however swathes of young people and economic migrant are quite happy and well off not working. If I say any more truth it will not be allowed to post!

I used to work in retail where ‘growth’ was achieved by opening more and more stores. It didn’t matter that a lot of the shops were losing money. As long as you could show the shareholders that the company was growing everything else was mere details.
And then the money ran out

Off topic, the burning question of the hour.
Why wont the Conservative Party conclude a pact with the Brexit Party?
In many ways it and UKIP wants to return to the right of centre once occupied by the Conservatives.
Why not back the BP to stand in Labour leave seats that they could win, but the Conservatives never.
Why not ensure a goodly majority and a NO DEAL Brexit which you crave for.
Boris failed to die in the ditch for what he wanted, by cooperating he can get that clean break exit. If he has to negotiate all over again with the Barnier Team we will never leave, and that will be unforgivable.

Because despite everything the people leading the Tory party still have a deeply ingrained sense of entitlement and they would not be willing to see Brexit Party candidates take, or as they might say “steal”, votes which they think of as being their votes, and possibly even seats which they think should in the natural course of events be Tory seats.

Here in Maidenhead if there are any Tory criticisms about splitting the pro-Brexit vote my answer will be, yes, indeed, and to avoid that the Tories should stand down their candidate; after all she did such a rubbish job as Prime Minister that she should not have the brass neck to expect to be re-elected.

That is what I thought might be done, and I was staggered to read that she intends to just carry on as an MP as if nothing has happened, and moreover the local Tory association sees nothing wrong with that …

From those constituencies that I have perused, which is not many to be fair, I have noticed that the 2015GE where UKIP did well, more votes were taken from Labour than the Tories. These UKIP voters returned, mostly, back to Labour. This supports Farage’s claim that the BXP will hurt Labour more so, on that score there is less incentive for a pact.

The onus is completely on Boris, but at the moment he apparently thinks that he does not need to do a deal. I suspect he is arrogant enough to assume he can do it alone and at the same time marginalise the BP. Not wise.

It is your party that is off the chart 15 billion of spending a year announced last week on hospitals, education, police, pension 4% rise, 1.7 rises social benefits and tv licenses for over 75 of 600 million a year going to the BBC, this week 63 billion a year announced on infrastructure spending or three per cent of GDP which goes up year on year, where will that money go, HS2, HS3, Crossrail 2 a few roads to nowhere a bit infrastructure on ports and rest on climate change and next week an announcement on tax cuts.

At a time when the deficit is rising to over 60 billion a year, and they haven’t even started spending yet, have they told about the road pricing scheme they bringing next year and other things to try pay for it all, no that’s in the small print and what will the vote get out of it, you be lucky if you see 10% pay rise over the 5 years, if you vote for this load of cowboys your throwing away your future to the robber barons.

What happened to Brexit with all this spending, Brexit is all about exports and manufacturing and putting small and medium companies first nothing about that or the high street which collapsing and house building, it a complete joke.

Reply Total cap ex could go up about £25bn a year under this provision,. not by £66bn. There is a substantial cap ex budget already in the figures. The extra current spending announced comes from the current surplus the government is running at the moment

There seems to a miss conception of who spending what this election, Tory 80 billion a year Labour 100 billion a year, Labour spending 40 billion a year on buying assets that will be left on the UK balance sheet of 200 billion which can be sold back at any time to raise money in the future so in real terms they only spending 60 billion pounds a year and Torys 80 billion pounds a year.

I must agree with you Ian. All these figures are pretty meaningless. What does a billion pounds look like for instance?
Is it to be used directly for patients, paying off debt, re-roofing, building a car park, nurse accommodation, what?What, where, how many, exactly when?

Sir, there was a pop song in the Charts in 1990 called “Dirty Cash: Money Talks” by “The Adventures of Stevie. V”: No more does “Money Talk” than in at Election time!

So, the Party that will win this General Election is the one that credibly demonstrates to the highest proportion of the electorate that its policies will make them better off- without imposing measures that the electorate don’t like: And, as seasoned political observers of elections across the globe observe “It is the Economy, Stupid!”.

Tax cuts across the board are the simplest way of doing this that is least likely to be replicated by the Left – thus the Conservatives retain their Unique Selling Point and if they can demonstrate a popular but sustainable way of funding the policies the Conservatives will retain fiscal credibility on the economy too.

Tax Cuts, major infrastructure Investment, more Apprenticeships and many more homes for the young and even raising the Minimum Wage to £10.50 per hour should all be seriously considered (if wage increases are countered by business rate cuts- as they should be – businesses won’t suffer and there won’t be more unemployment). They are both popular and would grow the Economy.

Borrowing pro-tem to fund it all is not harmful in today’s Low Interest Rate Climate. How one borrows is different. Japan, for instance, has a National Debt over 230% GDP but it is not black-listed by International Credit Ratings Agencies because almost all its debt is domestic (i.e government bonds owned by the Japanese). Britain’s National Debt is under 90% of GDP- and a proportion of this is owed to the Bank of England. There is still massive scope to borrow more (even also allowing for big Public Pension liabilities).

With low inflation- about £200 billion of Quantitative Easing (QE) is sustainable over the next five years (QE over the last decade was more than this). In addition, resolving to borrow more just from Britain (to pay off foreign debts and fund domestic policies) is unlikely to spook the foreign Credit Ratings Agencies and the British Pound would retain its value. Domestic borrowing -even with £200 billion QE over the next five years- will only result in an annual 2% increase in the Money Supply: Hardly Inflationery.

All such measures, combined with cancelling the unpopular HS2, pro-tem halving Foreign Aid and selling remaining shares in part-nationalised banks – would raise upwards of £500 billion in the next five years. In economic terms these measures would be credible and these amounts could fund some uniquely big popular, growth-enhancing policies!

You need big eye-catching policies to move the Electoral Dial (imagine a Swingometer): A fuel duty freeze and small increases in the National Insurance threshold wont cut the mustard. However, halving business rates, putting up both the Income Tax and NI Allowance to £15,000, raising the 40% Income Tax threshold to £80,000 and promising a one-off £500 for every man woman and child in Britain for Christmas would grab the electorate’s attention.

Since Labour are not committed to Tax Cuts, but £500 billion on infrastructure and on a re-nationalisation programme, they are unlikely to replicate it (and certainly not with any credibility): So you have a USP “If you want Big Tax Cuts you have to Vote Conservative. They will be on offer from No-one Else!”.

You know what you have got to get Boris Johnson to offer to be sure of winning the Election: Big Tax Cuts and £500 for Christmas funded by QE and domestic borrowing!

All the best for your own re-election as a Conservative MP and for Conservative electoral fortunes.

Wonder why the BoE isn’t cutting rates. Could the reason be as simple as the fact that Carney is a remainer – and that he’s hell bent on “proving” that our economy is doing badly?

I’m tired of being hammered on tax when I see it spent on people bringing up the kids they had without thinking how they would pay for it (other than via other people’s money).

About time Javid repealed IR35, as he indicated in 2012 when he said that “the silly tax known as IR35 should be repealed”.

However, the Cons Party has a habit of saying that when they’re 40 points behind in the polls and water it down to “We’ll review it” when there’s a chance of being on govt and then the review… strengthens it!!

And now they’re rolling it out into the private sector in April, extending the very strange ’employment status’ whereby the worker gets to pay all of income tax, employees NI AND employers’ NI.

Remind me again why myself , my extended family and the 300,000 businesses similar to mine and their families should vote for you? Driving away your core vote for years by trying to outdo socialists with socialist policies is not a smart approach to elections.

The suggestion that the Conservatives should move any further Left than they are is daft. The only rational option is to move to centre right: low taxes, small state, protect those who need it, prod those who loaf. This is what the country wants.

Suggesting it will garner more votes from layouts and troughers is idiotic. The facts of life are conservative.

JR says “… the Chancellor should allow scope for some tax cuts in the next budget. It is important these are not crowded out by further increases in spending.”

I thought you were in favour of some fiscal stimulus? Just how big a budget deficit are you prepared to run? Tax cuts are not the quickest way to boost incomes, they are slow-acting and a portion tends to get saved by households. Government spending is the fastest way to boost the economy. The BoE rates are holding up the Pound’s exchange value, which is holding down imported inflation in our large net import bill.

The UK needs a Ministry of Resource Application. Its job to find any sectors of the economy that have spare capacity to produce stuff we can sell. The Treasury then funds it to the point where the cost of labour or materials in that sector starts to show signs of inflation. If that point is reached start making more electricians; plumbers; brickies; carpenters; and, start looking for better materials etc.

Our own currency-issuing Treasury can afford to buy anything that is for sale in its own currency. There is no invoice in its own currency it can’t afford to pay. The Treasury does not borrow its own currency from anybody. Government Sector Net Debt (PSND), is the non-government sector’s net savings, always to the penny! The Treasury has unlimited capacity to fill the non-government sector’s desire to save till the end of time. Ask the Japanese government’s Treasury.

But, the “austerity” has been inflicted mainly at local government level by the Westminster government. Local government is very easy to blame for every failure in public service delivery, the UK voting muppetry is easily fooled. Hence see how local government has been starved of funding since the 2010 arrival of Conservative party neoliberalism. https://www.ons.gov.uk/economy/grossdomesticproductgdp/timeseries/rpiv/ukea

once again displaying his muppetry on not understanding the difference between effective financial management and austerity . Here in the real world we understand that the NHS spending £40k on diversity managers and I kid you not £50k on art curators, allied to the huge waste in local government and pork barrel projects is not good use of public money . The fact that Public servants aren’t really held to any form of responsibility for profligate spending is the problem. The LABOUR bailout of banks being a classic example

The trouble with running an unlimited budget deficit is that people will eventually lose faith in the value of the pound. At some people investors will notice the system as Acorn describes is crazy and get out of the pound…and into hard assets property, gold etc. The bond market will crash and interest rates rise sharply.

Why worry about work if the government could pay us all a fixed income from the magic MMT money tree ?

That surplus is from the last budget in March which has already disappeared, that’s why your party is showing any accounts before the election because you do want the voters to know that public spending is already out of control before you start spending bing, you can prove me wrong by showing up to accounts next week.

Sorry, the sovereign government does not save. What sense does it make to save in the currency that you issue? Households save to increase their capacity to spend in the future. How can this apply to the issuer of the currency who can spend at any time it chooses?

At the heart of national income accounting is an identity – the government deficit (surplus) equals the non-government surplus (deficit).

I note my contribution to this piece has been magically disappeared. If this forum is an echo chamber for those broadly in agreement with John Redwood I would like to know so I don’t waste anymore time thinking about the issues raised.

I note the closer we get to the election the more superficial the articles become so as not to ‘frighten the horses’ with the reality of our situation.

But the Government isn’t controlling public expenditure – far from it – so whence the scope for tax cuts?

About John Redwood

John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.